Sitting with a handful of parents and Portland School Board members in a small room last Friday, Superintendent Vicki Phillips spelled out dramatic budget cuts that will fall most heavily on the city's minority schools.

"If we had resources, it would be different," said Phillips. "Here, we're to the bare bone."

All Portland schools will face cuts, thanks to the expiration of the $33.5 million local-option tax voters passed two years ago for schools, on top of insufficient money in Gov. Ted Kulongoski's proposed budget. As a result, Phillips is playing a hand where the district will chop its overall budget by a quarter and start handing out pink slips while eliminating as many as 335 staffers-the vast majority of them teachers-over the next two years.

But while the staffing cuts in the first year amount to 11 percent on average, some schools will fare worse than others under Phillips' initial proposal. That's because last year the school board directed staff to make the budgeting process for individual schools more transparent.

The upshot: The district has scrapped informal funding arrangements that in the past favored predominantly African-American schools and replaced them with a uniform, colorblind formula based on poverty.

"Doing it this way is a huge step forward," school-board member David Wynde said at Friday's meeting. "When we talk about transparent and fair, we have that now."

Fairness, of course, is an eye-of-the-beholder kinda thing. Troubled Jefferson High School faces the loss of 24 positions, or 41 percent of its staff-causing schools activist Ron Herndon to call the staffing proposal "unethical."

"I think that it will accelerate the flight of students from Jefferson," he says. "This is another in a long line of decisions in the last 20 years that have resulted in Jefferson being a poor-performance school. This school is on the critical list right now."

In a sense, the new system amounts to an unraveling of Portland Public Schools' equivalent of the New Deal. More than two decades ago, facing a lawsuit over racial disparities in schools, the district started funneling local property-tax money to certain schools with a predominantly African-American student body, school officials say. For years, the state has in effect reimbursed Portland for that money under a desegregation law that expires June 30.

In some cases, school observers say, the increased attention worked. Humboldt, King, Applegate and Vernon elementary schools saw their test results climb. Other schools, like Jefferson and Tubman, have remained in trouble.

But the money was often divvied up in back rooms, not in public meetings. And past school administrators like Ben Canada caught flak for what critics called a hide-the-ball approach that left school-board members and parents out of the loop. The system was, as current board member Doug Morgan puts it, "mysterious and unequal."

Now the old system is largely coming to an end, replaced by a new "socioeconomic status" category of funding based strictly on the proportion of students living under the poverty line.

It's "cleaner and more rational," says board member Julia Brim-Edwards. Under the old system, she says, "essentially we had some higher-needs schools that received less funding than lower-needs schools."

The equity debate will be viewed by some as rearranging deck chairs on a sinking cruise liner. That's because it comes when school activists think the heat should be on Kulongoski, who they say has not kept his promise of putting children first. Earlier this year, facing budget problems of his own, he proposed a $5 billion statewide schools budget, which school officials say is $400 million short of what would maintain the status quo.

At Friday's meeting, Phillips got high marks from board members for releasing more information, earlier, than ever before. And principals of the hardest-hit schools can ask her for more money if her first proposal was unworkable, says her assistant Bill Farver.

But the publicity will not make these cuts any easier-or less controversial. At the next school-board meeting (6:30 pm Monday, March 28, at district headquarters, 501 N Dixon St.), Phillips will unveil a more developed version of the numbers she unveiled last week.